This blog is in some senses a continuation of my thinking through what I can see happening in the different ways that individuals are behaving online in Web 2.0, and the characteristics of those successful Web 2.0 businesses. To me a Web 2.0 business is characterised by its use of ‘awareness’, see the previous two blog entries, from an online business which is recognisable by having the usual business model transferred online. There is a big issue in the business side of ‘awareness’ that may not be there in such a big way in personal ‘awareness’. At the stage you will realise that if you have not read the previous two blog pieces it is necessary to do so!
Personal ‘awareness’ does not necessarily lead to a commercial transaction, i.e. using www.myspace.com increases your own, and others, awareness, but there is no financial transaction called for, so there is no ‘risk’ of being cheated. Making a choice to buy online requires an evaluation of the risk of the unknown partner. That’s where the advantage of an existing brand moving online for some of its business succeeds, with its online presence increasing accessibility, and leading, hopefully, to increased revenue. Some brands that move online use it as an opportunity for so called ‘brand stretch’ to add new services that it would have been difficult to offer in the their existing physical stores, but the brand recognition still creates the customer ‘trust’ in doing business, even in these new product areas.
Web 2.0 businesses have a different challenge, they can be ‘aware’ in themselves in terms of market demand, and their ‘community’ can be ‘aware’ as individuals, but how does the ‘trust’ model get created? Does it take time, and must a brand be established first? It’s a key question for the new and innovative business models, and something that some at least seem to have succeeded in managing. I have tried to research this by examining a reasonable cross section of businesses and I believe there are two major identifiable strategies, but does anyone know of others?
The first I will call ‘position arbitrage’ with the first generation of ‘online’ businesses such as www.amazon.com or even www.google.com increasingly taking this route to take advantage of their position, in addition to their brand, but it’s also potentially a strategy for new players. Amazon ‘fronts’ many small stores, and the Amazon position/brand acts as the ‘trust’ provider for both of the transacting parties, customer to get what they want from the unknown supplier, and supplier to get transaction services for the user. However this is really an extension of the existing brand model to a new, and now recognised set of enterprises from the Web 1.0 generation.
The new Web 2.0 businesses have a different challenge but at the same time their potential customer base has both enlarged and behaves different. Here the answer seems to be ‘community endorsement’ as with www.threadless.com from my previous Blogs on ‘awareness’ as a perfect example. This is a recognisable extension of the principles of www.ebay.com where the rating on other members of the community is the method of providing trust. However the degree to which these are now both niche and interactive communities is changing, it now seems to be more about depth than width. The eBay principle was based on all users commenting on the transactions they had made, and provided little of the ‘subjective’ feedback that a true connoisseur might want about the whole experience.
Web 2.0 seems to be encouraging a new world based less on an alternative way of transacting for the same products and increasingly on a new generation of more experience centric products. Think www.threadless.com for those interested in a community for original clothes design, through to www.youtube.com for video entertainment. These are new business categories that are both made possible by Web 2.0 technology and by Web 2.0 behaviour in their customers.
So why the heading ‘Trust’? There seems to have been in little more than five years a radical change in how we ‘trust’ doing things on the Web, and this seems to be tied to an overall adoption of the Web more widely, and its use in a different way by the younger generation of adults. Essentially risk and lack of trust occurs when we are confronted with the unfamiliar, the Web now seems to be so familiar and part of many (younger) people’s lives that new ways to establish trust seem to have been established. For this generation the substitution of the face to face meeting as a method to ‘rate’ the other person and establish trust seems to be complete, but at the same time this means that businesses wining over these people as customers have to meet them in the new way to build trust.
Less focus on the product and transaction with more focus on the community and experience is probably the summary.